Asked if she's hawkish like Plosser, Mester said she's neither a hawk nor a dove on monetary policy. "I consider myself an owl. Owls are wise." She added that she comes into each Fed policy meeting with an open mind.

Asman: So is Richard Fisher becoming a dove because he didn't dissent? Let's ask him.

Richard Fisher is Federal Reserve Bank of Dallas CEO and president -- you're not often called a dove, you have to admit that. But people were surprised that -- that you weren't the dissenting voice. And, in fact, here's what Mr. Plosser said about why he was a dissenter. He said, "The funds rate setting remains well behind what I consider to be appropriate given our goals."

Do you disagree with President Plosser on that?

FISHER: Well, first, David, just so you know, ornithologically speaking, doves are members of the pigeon family. I'm nobody's pigeon.

ASMAN: OK. There you go.

FISHER: I'm not, OK? So we've got to make that clear.

My own view is that these thresholds should act similar to triggers. So once the [unemployment] rate nears 6.5 percent, markets and the public should expect lift-off of short-term interest rates.

The economy is making progress in recovering from a deep recession. I have acknowledged the important role that low rates must play in supporting this recovery even as I have raised significant concerns about the current stance of zero interest rates for an extended period. Can efforts to speed up the pace of growth with untested monetary policy tools be effective? The FOMC is carefully considering such issues and believes the risks are worth taking. However, our limited understanding of the possible effects of unconventional policy tools causes me to give more weight to their risks and eventual consequences.

In raising these issues, it is not my goal to prematurely withdraw support. It is critical, however, to ensure we transition from a crisis-type policy stance of aggressive easing to one of accommodation that allows markets, households and businesses to begin to normalize their expectations for interest rates. In my view, therefore, we should not underestimate the risk of an extended period of zero interest rates and the accompanying incentives that may lead to future financial imbalances. Such imbalances could unwind in a disruptive manner and cause the labor market recovery to stumble. I am concerned that monetary policy at its current settings is overly accommodative relative to the long and variable lags with which it operates.

Central banks must focus on achieving sustainable growth in the long run and be patient in pursuing its longer-run goals. Attempting to speed up the recovery process creates risks that, if realized, could lead the economy down a more difficult road back to full employment and price stability.

Over time, the benefits of our asset purchases may be diminishing. For example, given how low interest rates currently are, it is possible that future asset purchases will not ease financial conditions by as much as they have in the past. And it is also possible that easier financial conditions, to the extent they do occur, may not provide the same boost to the economy as they have in the past.

In addition to the possibility that our policies may have diminishing benefits, they also may have some risks associated with them. I will mention four: credit risk, interest rate risk, the risk of adverse market functioning, and inflation risk. These and other risks are not easy to see or measure, but they need to be taken into account when setting monetary policy…

It is critical that we take these risks into consideration as we make our asset purchase decisions. To minimize some of these risks, we could aim for a smaller sized balance sheet than would otherwise occur if we were to maintain the current pace of asset purchases through the end of this year, as some financial market participants are expecting. This course of action would be all the more attractive if the economic outlook continues to improve, as I expect it will.

To explain this more clearly, if you could picture two lines, one sloping downward, representing the diminishing benefits of our policy actions, and one line sloping upward, representing the rising costs of those actions, we need to think carefully about where those lines will intersect. Those lines will cross at the point where the costs and benefits are equal, and where further policy actions might cause more harm than good. Reasonable people will differ on where that point of intersection may lie, especially given that many of the policy tools we are using are unconventional…

I will conclude by saying that the FOMC’s actions in the current economic cycle have been needed, understood, and generally supported. Going forward, we must take care to balance the costs and benefits of our monetary policy actions, so that we don’t introduce more uncertainty and create problems that hamper our ability to provide a balancing weight to our economy if needed down the road.

We’re at the limits of our understanding of how monetary policy affects the economy… Sometimes when you test the limits you find out where the limits are by breaking through and going too far.

Since my kids now love describing everyone as a hawk or a dove or some other kind of bird, I have taken to reminding them of this conviction I have: When my colleagues and I are doing our job correctly, we are neither hawks nor doves but owls--that is, we are trying to be as wise as possible in deploying all the tools we have to fulfill our legal mandate.

I find this game of labeling people hawks and doves as being fun for the media, fun for the people who read the media. I don't find it useful in thinking about myself and the way I interact with the committee at all. I see myself as being somebody who's going to come in there and think about the theory and the evidence and make a judgment based on that.

The bar for dissent from the committee is going to be pretty high for me. But you know, in terms of the dialogue, I try to bring best available theory that I have, best available evidence and go from there.

...

I think that's very important for people to take away how the FOMC operates. Person X might be in there saying, 'Hmm, you know, you've been saying the pluses about this policy, but there are also some minuses we should be keeping in mind.' And that doesn't mean at the end of the day that that person, Person X, is going to vote against that policy. At the same time, if a voting member feels sufficiently strongly the policy is going in the wrong direction, that the committee is taking the wrong steps, they should, at that point, I agree, dissent and communicate those concerns publicly.

I would love to be a screeching hawk once again, but I just don't think it is appropriate presently.

I have a reputation for being the most “hawkish” participant in the deliberations of the Federal Open Market Committee. I do not particularly like ornithological nomenclature—I would rather be considered a wise owl (and I certainly do not wish to be anybody’s pigeon). But I have a record that substantiates that “hawkish” reputation, having voted five times against monetary accommodation during the commodity-driven price boom of 2008. I consider inflation an evil spirit that rots the core of economic prosperity and must never, ever be countenanced. But it is clear to me that in this environment, inflation is unlikely to present a serious threat given the pervasive bias in the U.S. economy toward wage cuts and freezes, rising unemployment, the widespread loss in wealth that has resulted from both the housing and equity market corrections, continually declining consumption and business investment, and the anemic condition of the banking and credit system, all of which reinforce downside price pressures in a global economy groaning with excess capacity.

It's always too early to give the "all-clear" on inflation risks. 

I am a central banker to my core, so I know that somewhere, somehow, something will go wrong...

Greenspan’s initial image was not that of an inflation “dove.” In fact, he was typically portrayed by the media as an inflation “hawk” in the early years of his chairmanship. It took the media almost a decade to catch on to the fact that, relative to the center of gravity of the FOMC, Greenspan was actually a dove—which became crystal clear when he repeatedly restrained a committee that was eager to  raise rates in 1996-1997.  But it should have been evident earlier. After all, over the first eight years of the Greenspan chairmanship, inflation was consistently above the Fed’s likely long-run target, and yet the core CPI inflation rate fell by less than one percentage point.  That hardly looks like the handiwork of an “inflation nutter.”

Let me assure you that there are no hawks and there are no doves on the committee. I see only owls: 19 men and women who are doing their level best to devise a wise and considered policy aimed at fulfilling the Fed’s dual mandate of providing the monetary conditions that foster sustainable, non-inflationary growth.

Or I might fall back on the Dallas Fed ‘s tradition of poetry, which I will do now to preempt the “hawk” or “dove” question.

My Dallas predecessor
Aspired to be a dove
While others making policy
Were hawkish from above.
But this aviary naming
Invokes improper fowl
For I’d rather be remembered
As a wise, and thoughtful, owl.